Treasury wants more powers to nationalise as fast-track bill suggests crisis is far from over

The Government is fast-tracking its Banking Bill through Parliament and seeking sweeping additional powers to nationalise investment banks and asset managers in a clear signal that officials believe the financial crisis is far from over.

The extension of powers to be included in the Bill emerged from the details of last week's Pre-Budget Report.

The authority to take banks into public ownership will be extended to cover financial businesses that 'hold client assets or client money', which could cover everything from an investment bank to a High Street stockbroker.

Fast-track: Details of the Banking Bill emerged during the Pre-Budget Report

At the same time as proposing wider powers to take finance firms into State hands, the Treasury is speeding up the passage of the Bill to make sure it is not left without the power to take control at a failing bank, even for a few days.

Its nationalisation powers are covered by the Banking (Special Provisions) Act passed last year under which it took Northern Rock into State control. But the legislation lapses on February 21.

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With Parliamentary time limited over the Christmas break, the Government will on Thursday take the highly unusual action of introducing a duplicate bill in the House of Lords, allowing the planned law to be debated simultaneously in both houses. The procedure will cut about two weeks from the time needed to make the Bill law.

The fact that the Treasury dare not be without its nationalisation powers for even a fortnight suggests real fears that the financial crisis could erupt again at any time.

A Treasury spokesman said: 'The plan was always to get this Bill enacted before the Special Provisions Act expires.'

Meanwhile, the extension of nationalisation powers to cover more than just deposit-taking banks followed the chaotic failure of Lehman Brothers in September, which has left many UK investors scrabbling to recover money from the US bank's British arm.

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Treasury wants more powers to nationalise as fast-track bill suggests crisis is far from over